Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 2, Problem 37P
a)
Summary Introduction
To determine: The market share needed to ensure a total
NPV is the variance in the present value of cash entries and depletions. NPV is used to examine the profitability of a project over some time.
b)
Summary Introduction
To explain: The way through which an increase in market share changes the profit.
c)
Summary Introduction
To explain: The way through which an increase in market size growth changes the profit.
d)
Summary Introduction
To use: Excel’s auditing tool to show how the market growth assumption influences the spreadsheet.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a "teaser" rate of 4 percent, after that the rate can reset with a 5 percent annual payment cap. On the reset date, the composite rate is 6 percent. Assume that the loan allows for negative amortization. What would be the outstanding balance on the loan at the end of Year 3?
Multiple Choice
$192,926
$190,074
$192,812
$192,337
Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty
toy for the upcoming Christmas season, after which it would be discontinued. The total cost required
to produce and market this toy would be $500,000 plus $15 per toy produced. The company would
receive revenue of $35 for each toy sold.
Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms
of the number produced and sold. Then find the break-even point that this number must exceed to
make it worthwhile to introduce this toy.
Now assume that the number that can be sold might be less than the number produced. Write an
expression for the profit in terms of these two numbers.
Formulate a spreadsheet that will give the profit in part b for any values of the two numbers.
Write a mathematical expression for the constraint that the number produced should not exceed the
number that can be sold.
Asymmetric information and imperfect information tend to distort market price and quantity. The use of a money-back guarantee might work to
Group of answer choices
Enhance the promise of quality and reduce distortion of the market price and quantity.
Motivate buyers to intentionally abuse products so that they can get their money back, reducing the impact of distorted market price and quantity.
Encourage buyers to worry about why such a guarantee was necessary, increasing the distortion of market price and quantity.
Stabilize the price and quantity of the product.
Chapter 2 Solutions
Practical Management Science
Ch. 2.4 - Prob. 1PCh. 2.4 - Prob. 2PCh. 2.4 - Prob. 3PCh. 2.4 - Prob. 4PCh. 2.5 - Prob. 5PCh. 2.5 - Prob. 6PCh. 2.5 - Prob. 7PCh. 2.5 - Prob. 8PCh. 2.5 - Prob. 9PCh. 2.6 - Prob. 10P
Ch. 2.6 - Prob. 11PCh. 2.6 - Prob. 12PCh. 2.6 - Prob. 13PCh. 2.7 - Prob. 14PCh. 2.7 - Prob. 15PCh. 2.7 - Prob. 16PCh. 2.7 - Prob. 17PCh. 2.7 - Prob. 18PCh. 2.7 - Prob. 19PCh. 2 - Julie James is opening a lemonade stand. She...Ch. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - The file P02_26.xlsx lists sales (in millions of...Ch. 2 - Prob. 27PCh. 2 - The file P02_28.xlsx gives the annual sales for...Ch. 2 - Prob. 29PCh. 2 - A company manufacturers a product in the United...Ch. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Assume the demand for a companys drug Wozac during...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Suppose you are borrowing 25,000 and making...Ch. 2 - You are thinking of starting Peaco, which will...Ch. 2 - Prob. 40PCh. 2 - The file P02_41.xlsx contains the cumulative...Ch. 2 - Prob. 42PCh. 2 - Prob. 43PCh. 2 - The IRR is the discount rate r that makes a...Ch. 2 - A project does not necessarily have a unique IRR....Ch. 2 - Prob. 46PCh. 2 - Prob. 1CCh. 2 - The eTech Company is a fairly recent entry in the...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- (True, False) Stagflation happens when the economy is experiencing a bust and deflation. Stagflation occurs when the (AD, SR-AS) curve shifts to the (right, left). In the short-run, this shift would cause the overall price level to (increase, decrease) and output to (increase, decrease). Workers may see the short-run effect on the overall price level and negotiate for (higher, lower) wages, resulting in a price-wage spiral. Given that 1) output has (increased, declined) in the short-run, there is a (negative, positive, zero) output gap and that there is a (negative, positive, zero) cyclical unemployment, workers will eventually (accept, fight for) (higher, lower) wages. When this happens, the (AD, SR-AS, LR-AS) curve will shift to the |(right, left), reaching the long-run equilibrium.arrow_forwardIf all the individual land parcels in a new housing development are sold for $300,000 each, the developer projects total revenue from land sales will be $120 million. If the land lender requires that their $60 million land loan be completely paid off by the time that 75% of the individual land parcels have been sold, what would be the lender’s minimum release price for each parcel? a. $150,000 b. $200,000 c. $250,000 d.$300,000arrow_forwardCalculate the break-even point for a new toy that costs $12 to make and market and that will be sold for $15. The total quantity that will be sold at that price is 200,000.arrow_forward
- Company X produces a product, GlueX3, that Company X sales for $5. An opportunity presents itself to reallocate its manufacturing facility and related resources to produce Epoxy10. It believes it can sell Epoxy10 for $8. Explain how this switch creates “value”. Be sure to include for whom.arrow_forwardJerry takes out a mortgage at 5.2%. After a few years, his payment increases and he sees that the interest rate of his mortgage is now 6.1%. Which of these mortgage types does Jerry most likely have? ARM loan home equity loan fixed-rate loan package mortgagearrow_forwardWhich of the following statements is correct for the Black-Scholes model? A) The price of an American call written on a stock is: c = SN(d1)-Ke-rTN(d2) B) The stock price at a future point in time follows a log-normal distribution. C) The continuously compounded return on the stock follows a log-normal distribution. D) Black-Scholes prices may allow for arbitrage opportunities. Please explain and justify your choice.arrow_forward
- Which of the following types of mortgage loans is presumed to feature points or fees not excending 3%, a maximum term not to exceed 30 years, and no risky features (such as negative amortization, interest-only, or balloon loans)? A) A qualified mortgage B) A conventional mortgage C) A non-qualified mortgage D) A home equity line of credit (HELOC) mortgagearrow_forwardA building has a depreciation rate of 10%. The reproduction cost is $250,000 and the land value is $50,000. Using the cost approach, what is the value of the building? $275,000 $285,000 $310,000 $190,000arrow_forwardABC Corporation has recently given out a nine-month contract to a construction subcontractor. At the end of the first month, it becomes obvious that the subcontractor is not reporting costs according to an appropriate WBS level. ABC Corporation asks the subcontractor to change its cost reporting procedures. The subcontractor states that this cannot be done without additional funding. This problem has occurred with other subcontractors as well. What can ABC Corporation do about this?arrow_forward
- Please show all work and explain answer. OneRing Company sells memorabilia to residents of Middle-Earth. They are about to invest $6 million in a new ring making plant. Fixed costs of operating the plant are $1 million a year. The ring costs $60/unit to manufacture (variable cost) and will be sold for $200/unit. The plant will last for 5 years, and will be depreciated over 5 years to zero using the straight-line method. The plant will have no salvage value after five years. Net working capital requirements are negligible for this project. Assume there are no taxes in Middle-Earth, and that the appropriate discount rate for the project is ten percent. How many rings per year must OneRing sell in order to break even?arrow_forwardDiscuss the Thaler wine problem with your group, and summarize the discussion and any conclusions in a few sentences here. “Suppose you bought a case of a good 1982 Bordeaux for $20 a bottle. The wine now sells at auction for about $75 a bottle. You have decided to drink a bottle. Which of the following best captures your feeling of the cost to you of drinking this bottle?” (Thaler, 1999) $0 $20 $20 plus interest $75 -$55 (negative $55 cost) Or something else?arrow_forwardWe are thinking of filming the Don Harnett story. Weknow that if the film is a flop, we will lose $4 million, andif the film is a success, we will earn $15 million. Beforehand,we believe that there is a 10% chance that the Don Harnettstory will be a hit. Before filming, we have the option ofpaying the noted movie critic Roger Alert $1 million for hisview of the film. In the past, Alert has predicted 60% of allactual hits to be hits and 90% of all actual flops to be flops.We want to maximize our expected profits. Use a decisiontree to determine our best strategy. What is EVSI? What isEVPI?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,